Financial advisors have dominated the distribution of financial products to investors for decades. However, wealth is changing hands from older to younger generations, who demand high-tech, high-touch, personalized services at lower costs.

Wealth managers are facing rising competition from new market entrants and regulatory pressure from Fidleg and MiFID. These factors have led to decreasing margins, clients leaving for competitors and a need for banks to improve the efficiency of their workforce and processes drastically.

Many wealth managers have found difficulties in generating an engaging client journey to form a lasting bond and loyalty with their customers; the pandemic has made this challenge significantly more difficult due to limited in-person interaction.

Digital Mass Personalization

Maintaining and improving engagement is key to retaining clients, generating new business and safeguarding against market downturns. Banks putting into practice Digital Mass Personalization processes are those that are best placed to cope with the current wealth management environment.

Traditionally, personalization is done by the relationship manager. Today, personalization can also be performed to great effect digitally as a supplement to the work done by advisors. This type of digital personalization is demonstrated well by industry leaders in other sectors, such as Amazon or Netflix. This same approach can be applied to banking customers, with client surveys indicating that clients are open to their banks using these personalization techniques.

Substantial Potential

More than a third of clients surveyed wanted their bank to provide Amazon-like automatic feedbacks or recommendations, with another quarter open to even more personalization such as a «personal shopper.» In fact, when done well, personalization in banking has substantial potential to increase engagement and loyalty.

In 2018, some major financial institutions found that just two personalized messages via their banking apps led to an increase of 10 percent in the frequency of client interactions. These personalized interactions made investors feel valued and respected. Personalization allows wealth managers to differentiate themselves from competitors as financial products and services become increasingly commoditized.

Investment Proposals

Personalized communication and storytelling, achieved through our AI and natural language generation tools, coupled with the generation of personalized investment ideas can be extremely important in establishing and reinforcing a customer’s engagement and loyalty. Clients are more likely to accept investment proposals that are tailored to both their portfolio and needs.

Realistically, CIOs or wealth managers rarely have the time to develop investment proposals tailored to each individual client. This process must be digitalized in such a way that personalized proposals can be generated on a massive scale, while still taking into account the CIO’s market expertise and the advisor’s client expertise. Intermediaries that make the effort to understand and anticipate their clients’ needs are by far the most successful in this regard.

Proprietary Methodologies

When implemented at a bank, Prometeia wealth management software solution, PFTPro, achieves this through collecting, processing and understanding client data. The platform is fed through our personalization processes and algorithms to identify and quantify each investor’s needs. Once a precise set of needs is identified for each client, an analysis of their portfolios yields an evaluation of the degree to which these needs are fulfilled. Using advanced proprietary methodologies, Prometeia’s proposal and portfolio optimization engines, supervised and guided by the bank’s CIO, find the combination of products and services that most closely satisfy each investor’s needs.

Clients view the final recommendation as catered specifically to them because it is tailored to their specific needs and financial situation, even though it has been generated on a massive scale. The presence of an accompanying story explaining the recommendation’s reasoning and benefits can add a personal touch to what is in essence an industrialized process. Each personalized proposal is editable by the client’s advisor so that it is adapted to the aspects of the customer that cannot be captured by the data.

Significant Increases

Investment ideas can be vetted through these same processes, showing the CIO where their strategies are placeable and which clients have the highest propensity to accept a given investment proposal, leading to significant increases in acceptance rates and transaction volumes.